September 6, 2006

 

Asia Soybean Outlook: Premiums may fall; good US crop seen

 

 

Premiums for soybeans delivered to Asia may fall in the week ahead on bearish fundamentals for Chicago Board of Trade soybean futures.

 

The U.S. looks set to harvest a good soybean crop, while soybean supply remains largely comfortable globally.

 

Demand from China, the world's biggest soybean importer, showed signs of improvement last week, said an analyst with commodities analysis firm JC Intelligence Shanghai.

 

"There was a slight increase in Chinese soybean imports last week. As far as we know, 5-6 cargoes of soybeans were booked by importers last week," said the analyst.

 

The analyst said rising soybean prices in China's local markets because of better offtake of soymeal in the feed sector is a major reason for the rise in soybean imports.

 

She added that an improvement in soybean crush margins in China is also contributing to the rise in imports.

 

At present, premiums for soybeans delivered to China from the U.S. are 180 U.S. cents a bushel above CBOT's November contract, unchanged from last Wednesday.

 

In China's local markets, soybean prices remain stable at high levels, supported by good demand from feed and crushing companies.

 

Crushing companies, especially in northeast China, are purchasing more soybeans in a rush to increase production to take advantage of the recovery in prices of soymeal and soyoil.

 

Chinese analysts don't expect soybean prices to fall in local markets, as they feel rising freight costs will keep imported soybean prices high in China, despite expectations of a fall in CBOT soybean futures.

 

A weekly survey by the China National Grains and Oils Information Center released last Friday showed a continuation of bullish sentiment by China's local traders on soybeans, as demand has shown a trend of picking up lately.

 

In addition, traders expect China's soybean output to decline this year, which will lead to more imports, said the government-backed think-tank.

 

Traders also maintained their positive outlook for soymeal. Their bullishness increased slightly, which could be mainly attributed to an increase in soymeal prices in recent days. They feel the recovery is gradually gathering momentum, with demand increasing and soybean stocks declining, CNGOIC said.

 

In India, sowing of the summer-sown soybean crop is progressing at a fast pace.

 

The area covered by the soybean crop as of Aug. 31 is estimated at 8.0 million hectares, up from 7.7 million hectares a year earlier.

 

Harvesting of the crop will begin next month.

 

The only major soybean import deal reported in the week to Wednesday was Taiwan's Major Feed Industry Group buying 60,000 tonnes of U.S.-origin soybeans from trading house Marubeni in a tender.

 

The premium for soybeans delivered to Taiwan from the U.S. is currently 182 U.S. cents above CBOT's December contract.